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OCM Lung Cancer Episode Costs Have Increased Dramatically Over Time

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An Avalere analysis found that Oncology Care Model (OCM) lung cancer episode expenditures increased over 20% from performance periods 2 to 6 while the benchmark price increased about 10% during this period. During this same period, The Center for Medicare & Medicaid Innovation (CMMI) included 20 lung-cancer-specific changes to the OCM Novel Therapy Adjustment (NTA) list. This dynamic supports the inclusion of tumor-specific adjustments in the future Oncology Care First (OCF) model to further account for advancements in cancer management.

The OCM is a voluntary, episode-based oncology-focused payment model from the Centers for Medicare & Medicaid Services (CMS) that aims to improve care coordination and reduce costs for Medicare fee-for-service (FFS) beneficiaries. The model evaluates the total cost of care for 6-month episodes initiated by chemotherapy treatments that are attributed to oncology practices participating in the model. Starting in July 2016, in each performance period (PP), the CMS measures practice performance based on its total expenditures relative to a benchmark price. Practice performance and its elected risk track for the PP determines whether the practice earns a performance-based payment or owes a recoupment.

Lung cancer is 1 of 24 cancer types included in the OCM and accounts for nearly 10% of OCM episodes and 16% of total OCM episode expenditure. Between PP2 and PP6 (January 2017–December 2019), 134 updates were made to the OCM NTA list, about 15% of which were applicable to episodes attributed to the lung cancer bundle. As lung cancer care management has advanced, drug expenditures and increasing episodes costs are likely a result of evolving standards of care.

Avalere replicated the OCM methodology to calculate episode expenditures and benchmark prices. To compare episode performance between all episodes and lung cancer episodes, Avalere calculated the average episodes expenditures and benchmark price for each group in PP2–PP6.

As shown in Figure 1, average expenditures for all cancers have increased about 16% from PP2 to PP6, and the benchmark prices have increased comparably (15%). The benchmark prices for lung cancer episodes, however, have not increased at a similar rate to lung cancer episode expenditures. Between PP2 and PP6, average lung cancer episode expenditures increased about 20% while the average benchmark price only increased about 10%. The lung cancer expenditure increase was primarily driven by an increase in oncolytic drug spending, likely tied to advances in oncolytic treatment and availability of new combination regimens.

These findings indicate that the OCM methodology may not be appropriately accounting for these changes in treatments. Notable differences between episode expenditures and benchmark prices in lung cancer episodes compared to all episodes support the transition to tumor-specific adjustments (i.e., trend factor or novel therapy adjustment) when calculating benchmark prices, as discussed in the OCF Request For Information (RFI) released November 2019.

Figure 1. Average Episode Expenditure and Benchmark Price Among OCM Participants, PP2–PP6
Figure 1. Average Episode Expenditure and Benchmark Price Among OCM Participants, PP2–PP6

As stakeholders continue to evaluate how different aspects of the OCM methodology may impact overall model performance, it is important to consider how these trends inform areas of improvement in future model design. The OCF model was announced as the OCM’s successor, with potential methodology changes described in the OCF RFI. Two methodological changes suggested in the OCF RFI include a tumor-specific trend factor and tumor-specific novel therapy adjustment. Implementing these changes may better align the OCM lung cancer benchmark pricing with actual episode expenditures. With continued advancements in oncology treatments and oncology care management, stakeholders look to the OCF Request for Application (RFA) to understand how CMMI will account for these advancements when measuring practice performance.


Avalere performed this analysis using Medicare Part A/B FFS claims and Part D prescription drug event data under a CMS research data use agreement. Avalere replicated the OCM payment methodology developed by CMS, including the attribution of episodes to practices, the assignment of cancer type, and the calculation of benchmark prices. Benchmark prices are calculated based on the OCM prediction model, which estimates episode costs based on key factors such as tumor type, beneficiary demographics and comorbidities, and utilization of certain services. Participants were identified in the claims data through tax identification numbers (TIN) reported on Part B claims. Avalere identified 174 practices that were ever enrolled in the OCM through TIN mapping and general research of oncology practices. The baseline period includes episodes initiated between January 1, 2012, and December 31, 2014, and the intervention period used for this analysis includes episodes initiated between January 2, 2017, and July 1, 2019 (PP2–PP6).

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